Rising connected watch sales fail to rescue tough Q1 for Fossil Group

Fossil Group’s net sales in Europe fell by 7% to $195.7 million in the first quarter of 2017, with the UK singled out as a market that under-performed the rest of the continent.

Fossil does not break down its world-wide financial results by country and product category, but a trading statement for the quarter, which ended on April 30, 2017, said that sales of jewellery and watches were roughly flat in constant currency with growth in connected watches offset by a decline in traditional watches.

Within the European region, modest growth in Spain was more than offset by a decline in the UK and Middle East, the company said.

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The most recent financial report for Fossil (UK) Limited, Fossil Group’s British subsidiary, showed turnover for the full year of 2015 as £138.4 million, but 2016 is known to have been a particularly difficult year for watches priced at under £500 where the company operates.

Retail analyst GfK reported that the total value of sales for watches priced at under £500 declined by over 14% in the UK last year.

The world-wide rise in connected watch sales for Fossil Group comes in a year when the company is accelerating the introduction of models across its family of owned and licensed brands, which includes Michael Kors, Fossil, Skagen and Emporio Armani.

Steve Evans, executive vice-president of owned brands at Fossil Group, told WatchPro earlier this year that smartwatches and hybrids are crucial to the business moving forward.

“We are confident that the launch of hybrid smartwatches across multiple brands this year will be a transformative moment in the watch industry,” he said.